Under the background of deepening the reform of medical insurance payment method，DRG is the key policy of medical insurance reform.In the process of promoting its implementation, how to reflect the dual orientation of cost control and quality improvement, and how to interpret and respond to public hospitals have become the "required question" in the medical and health field in the new era.This paper organically combines the Multiple-Stream theory with the Yardstick competition theory, builds a theoretical analysis framework, qualitatively deduces the theoretical rationality and necessity of the dual orientation of cost control and quality improvement of DRG, and draws the conclusion that there are still contradictions at the present stage. Through the detailed correspondence of DRG reform from the perspectives of medical insurance and medical management, the causes of contradictions are analyzed and detailed, and then corresponding countermeasures and suggestions are put forward, in order to provide support for further improvement and implementation of DRG policy.